Finance Secretary Carlos G. Dominguez III has said that the series of mandated increases in capital requirements for life and non-life insurers should proceed as set out in the insurance law. This is despite an appeal from the insurance industry to review the capital increases set out in the insurance code.

Under the law, existing insurance companies need to have a paid capital of PHP900 million (US$17.3 million) by the end of next year and PHP1.3 billion by end-2022. The current minimum capital requirement is PHP550 million.

Non-life insurers in particular are requesting the government to suspend the implementation of the final tranche of increase, reported Manila Bulletin.

But Mr Dominguez said: “We want an industry that is strong, resilient, and an industry that can really serve the public, so in the insurance business it is always good to have a healthy capitalisation.”

“We are also preparing for competition in ASEAN, so how can you compete with the big boys if your capital is only $10 million,” he added.

Instead of suspending the law’s implementation, Mr Dominguez suggested that insurance companies consolidate or merge if they cannot meet the minimum capital requirement.

Meanwhile, Mr Reynaldo A. de Dios, an insurance expert, believes the local insurers are “over capitalised,” citing that in ASEAN, the Philippines would have by 2022 the highest net worth requirements for insurers.

“In addition, Philippine insurers are subject to the risk-based capital system,” he said.

Last month, Insurance Commissioner Dennis B. Funa said that the insurance regulator would revisit the net worth requirements of local insurance firms following a study it had conducted on insurers' capitalisation in Southeast Asia.